Tuesday, 29 November 2016

Borders waste treatment fiasco: post mortem (part two)

by DOUG COLLIE

A large delegation of councillors and senior local government officials from the Scottish Borders spent almost £4,000 of public money on a fact finding jaunt to the wrong south of England waste treatment plant, according to new information released via a Freedom of Information request.

The party made the trip to the New Earth Solutions Group's (NES) "pioneering" Avonmouth facility, near Bristol in October 2014, and returned impressed and convinced the plant would act as a blueprint for a £21 million project at Easter Langlee, Galashiels.

But just four months after the tour, including an overnight stay at an upmarket city hotel, the deal between council and contractors NES collapsed in disarray after it was confirmed the Avonmouth technology was not fit for purpose while the company could not secure funding for the project. Subsequently the 'misfiring' Avonmouth facility was offloaded by NES for no monetary consideration...so much for due diligence by the Borders party during an inspection which failed to produce a single written report or minute.

Extracts from a confidential account of a "lessons learnt" workshop, held in the Edinburgh law firm Brodies' office in April 2015, reveal a range of negative issues linked to the contract over its four-year life span. Brodies had been commissioned by the council to provide "expert" legal advice, and had collected fees totalling £679,000 by the time the entire venture was abandoned at a cost of £2.4 million to Borders taxpayers.

But large tracts of the information held in the document remain covered up after SBC was allowed to redact entire sections deemed outwith the scope of the FOI request. It means all the negative bullet points which flowed from a year long contract moratorium which SBC granted NES are blacked out while a section headed RISKS THAT REMAIN OPEN AT END OF PROJECT has been 100% censored. So much for FREEDOM of information!

But we are told the much vaunted members' visit should have been to the NES centre at Canford, in Dorset, 110 miles from Avonmouth. The report states - perhaps incredibly - "The visit was to demonstrate how a site worked. However Avonmouth did not show this in balance; instead it was being over positive". So who arranged the trip in the first place?

The loss of more than £2 million of public money is dealt with like this: "SBC occurred £2 million loss up to termination. However SBC did not incur the cost of NES losses etc. which could have amounted to double. The fact this was written off in reserves does mean there will not be any effect on services to customers: it will be business as usual".

There appears to have been a complete lack of concern that such a significant sum was squandered thanks to decisions taken by bungling councillors on recommendations made by ineffective or ill informed officers and advisers.

And how the entire costly debacle, complete with the list of issues outlined in our coverage of the "lessons learnt" documents managed to acquire a clean bill of health from external auditors appointed by Audit Scotland is surely beyond belief.

The report says the deal offered by NES was a market leader at the time. But one attendee at the 2015 workshop - the identity of the participants has been protected - queried whether the project team had been "blinded" by the deal on the table.

According to the document: "The reply to this would be no this was not the case. In hindsight the team could have requested more detailed modelling. However, time was against us. In hindsight the more appropriate course would have been to go down the route of a different contract structure such as DBOM (Design Build Operate Maintain)".

The Borders project was to have been financed by the Isle of Man-based New Earth Recycling & Renewables [NERR] infrastructure fund, which is now in the hands of liquidators Deloitte with no prospect of recovery for shareholders and investors.

The workshop was told that in late 2013 it was made clear the funding from NERR was no longer available, so there was now no funder of last resort.

An evaluation of the 12-month moratorium, which only delayed the inevitable cancellation of the deal, concludes "It was difficult to admit the project was going to fail especially after all the hours spent, plus the project also had a high profile. It was a brave decision to terminate, but there was the risk that come 2020 the council could still have been left with nothing.

"The lesson learnt is around good project management, that careful thought had been given and analysed, and the timescale appreciated that if the contract was not terminated the risks of continuing delivery failure would be too high."

And the report adds: "Robustness of process during the termination reduced the risk of a claim from NES. Currently (April 2015) two months have passed without a claim: however they have up to five years".